9.6.3 Discount cards

There are also voucher schemes where the issuer, as a form of business promotion, sells vouchers that allow the holder a form of discount at other businesses, where the issuer of the voucher does not indemnify the businesses accepting these vouchers (or vice versa).1 The rationale behind this type of voucher scheme lies in the fact that the business selling the vouchers is considered to promote the businesses that agree to accept the vouchers, because people will have to go to those businesses to redeem the vouchers and often (have to) purchase more than only the free or discounted products or services, and may well become regular customers of those businesses.

I am of the view that where the business making a supply in return for which it (also) accepts a voucher without being reimbursed for accepting that voucher (i.e. the business did not issue it for consideration nor is it reimbursed by the issuer of the voucher for accepting it), this voucher is not ‘accepted as consideration or part consideration for a supply of goods or services’,2 meaning that it does not qualify as a voucher under the current EU VAT rules (from 1 January 2019).

The CJEU decided a case that deals with this type of voucher scheme: the Granton-case.3 However, the questions referred to the CJEU only focussed on whether a VAT exemption could apply to the transactions performed by the issuer of these types of vouchers. In that case, the vouchers sold by the issuer gave the holder the right to not pay the full advertised (shelf) price of items (goods or services) sold by participating businesses. In its ruling, the CJEU makes clear that it considers the sale of such vouchers to be a service that is not VAT exempt, and that the taxable amount for the service is the full amount received by the issuer.4

Even though the voucher is, as a general rule, not the purpose or object of a transaction,5 in my view, it is in this situation. From the perspective of the issuer of the voucher, issuing it is more the provision of an advertisement service paid by potential customers of a business than a voucher scheme in the sense of the schemes I described before. Therefore, I am also of the view that the supply of the voucher by the issuer should be considered a supply of a service, which is not VAT exempt.

The only issue that I have with this outcome occurs where issuing the voucher is subject to the standard VAT rate, and the supply of the goods or services for which it is redeemed has a different VAT treatment. In that case, if a customer would purchase a voucher and use that voucher to purchase a good or service that is subject to a lower VAT rate at a discounted price, would spend, in his view, an amount that is partially subject to the standard VAT rate and partially to the lower VAT rate. This is, however, unavoidable, because I cannot find any grounds to argue that the sale of this type of voucher should not be subject to VAT. This anomaly can potentially lead to VAT planning ideas, where a business that is unable to fully deduct VAT purchases a voucher from a (sufficiently) unrelated party to use as the right to a discount. In that case, it could possibly incur a lower amount of non-deductible VAT than if it would have paid the full price to the seller of the goods or services. This could, for example, be used by government bodies to avoid making a local intra-Community acquisition of a good from a jurisdiction with a lower VAT rate, where the threshold for making intra-Community acquisitions under the EU VAT rules would otherwise be exceeded.6 In this case, transforming part of the payment from a payment for a supply of goods to payment for a supply of services could save VAT. As I mentioned before, I don’t see how this can be avoided under the rules in the EU VAT Directive. The planning idea itself could possibly be countered by the principle of ‘prohibition of abuse of law’. This goes outside the scope of my research and therefore I will not further investigate this.